WASHINGTON TWP., Montgomery County — UPDATE @ 1:13 p.m.:
A Bellbrook man facing more than 100 felony counts for allegedly defrauding investors is in custody.
John Gregory Schmidt, 67, is being held in the Montgomery County Jail, according to the Miami Valley Jails website.
He was booked around 11:59 a.m.
An arrest warrant was issued for Schmidt Thursday after he was indicted on 128 felony counts by a Montgomery County grand jury.
INITIAL REPORT:
A Bellbrook man faces 128 felony counts relating to securities fraud and alleging he defrauded investors, including some senior citizens who were suffering from dementia.
Montgomery County Prosecutor Mat Heck Jr. announced the county charges and alleged Ponzi scheme Thursday against John Gregory Schmidt, 67.
Schmidt also faces civil charges filed in federal court two months ago by the U.S. Securities and Exchange Commission.
A warrant was issued for Schmidt’s arrest. He is scheduled to be arraigned at 8:30 a.m. Jan. 10.
The Montgomery County grand jury indicted Schmidt on 124 counts of forgery; two counts of theft from an elderly or disabled adult in an amount greater than $150,000; a count of telecommunications fraud in an amount greater than $150,000 but less than $1 million; and a count of fraud or deceit by an investment advisor in an amount greater than $150,000.
[ >> SEC charges Bellbrook man with ‘rob Peter to pay Paul’ scheme ]
Schmidt ran Schmidt Investment Strategies Group on Paragon Road in Washington Township, while employed by Wells Fargo Advisors Financial since 2006.
During this time, the defendant stole money from investment accounts in order to cover for stolen money in other investors’ accounts – a Ponzi scheme, the prosecutor’s office said in a statement outlining the charges.
“The defendant also created and falsified financial statements to investors in an effort to cover for the missing investments,” the office said. “In addition, the defendant sold securities without the knowledge or authorization of the investors, and the defendant received commissions on those transactions of nearly a quarter‐million dollars.”
After the Ohio Department of Insurance noticed “irregularities” in the defendant’s activity, the Ohio Department of Insurance and the Ohio Department of Commerce began investigating, the prosecutor said.
“For years, this defendant defrauded a number of investors, many of them elderly or with dementia,” Heck said in his office’s statement. “He had to keep stealing from more investors in order to cover for the thefts from other investors.”
This kind of fraud unfortunately is increasingly common, Brad Bennett, former enforcement chief for FINRA (the Financial Industry Regulatory Authority), told the Dayton Daily News in October.
“This is not an atypical story,” Bennett said. “It’s a tragedy. With these victims, it’s usually the last penny they have.”
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